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21 January 2022

Refund application cannot be rejected by the Competent Authority on ground of non-submission of documentary evidence, filed in relation to the order passed by the Additional Commissioner in favor of the assessee allowing the refund claim – High Court of Allahabad

In the case of Manoj Handlooms (P.) Ltd. vs Union of India ([2022] 134 taxmann.com 47 (Allahabad)), a refund claim had arisen only on the strength of appeal order which was duly filed by the assessee, however the same was rejected by the competent authority on the ground of non-submission of documentary evidence.

Facts:

The Appellate Authority vide order dated 8-1-2021, rejected order no. 86 dated 11-7-2019 passed by the Deputy Commissioner and directed for refund of the entire amount on deposit made by the assessee, under the order dated 11-7-2019.

In pursuance of the above order, the assessee filed his first refund application for Rs. 15 lacs on 5-2-2021. Acknowledgement on Form GST-RFD-02 was issued to the competent authority through the GST Portal.

However, vide order dated 26-2-2021 the competent authority rejected the application on Form GST-RFD-06, stating that:

"I hereby reject the claim for non-submission of any documentary evidence regarding payment of tax & penalty."

Thereafter, the assessee has been forced to file repeated applications, which have similarly been rejected.

Held:

The assessee is entitled to claim the refund arising from the appeal order dated 8-1-2021. Also, the assessee filed a proper refund application through online mode. It was for the competent authority which was supposed to scrutinize the same and inform the assessee in real time, of any defect in that application.

Where upon scrutiny, the acknowledgment on Form GST-RFD-02 has been issued acknowledging the claim filed by the assessee, the competent authorities cannot reject the application on the ground that it was incomplete ignoring the existence of the appeal order dated 8-1-2021.

It was further stated that the authorities are forcing the assessee to litigate and also defeating the claim of interest that is otherwise due on account of delay in processing the refund application.

Accordingly, the competent authority was asked to pass a fresh order with respect to the acknowledgement on Form GST-RFD-02 dated 5-2-2021. The competent authority was further directed to pay the amount of refund due to the assessee along with statutory interest for the period for which the refund application has remained pending since 5-2-2021.